Vanguard Critiques Bitcoin as a “Digital Labubu” but Launches ETF Trading

Vanguard Group has begun allowing clients to trade spot Bitcoin exchange-traded funds (ETFs), yet the asset manager, which oversees $12 trillion, continues to express skepticism about cryptocurrencies.

Key Takeaways

Vanguard launches access to spot Bitcoin ETFs while maintaining a critical stance towards crypto.
The firm equates Bitcoin to a viral toy collectible, lacking the productive qualities of traditional investments.
Despite offering ETF trading, Vanguard does not provide advice on investing in digital assets.
Leadership changes have influenced Vanguard’s strategy amid pressures from competitors capturing significant investments in crypto.
Executives at Vanguard view cryptocurrencies as speculative but acknowledge potential value under certain economic conditions.

Opening Up to ETF Trading Despite Concerns

Vanguard’s recent decision to allow ETF trading follows extensive monitoring of cryptocurrency performance since the inception of spot Bitcoin funds in January 2024. John Ameriks, Vanguard’s global head of quantitative equity, expressed that the firm aimed to ensure these products lived up to their descriptions, stating, “delivered what’s on the tin, the way that they’re described.”

Nevertheless, Ameriks clarified that Vanguard will not guide clients about whether to invest in or divest from digital-asset ETFs. He emphasized, “We allow people to hold and buy these ETFs on our platform if they wish to do so, but they do so with discretion.” Clients expressed dissatisfaction due to initial restrictions, prompting some to threaten to close their accounts, particularly as competitors like BlackRock made significant strides in the crypto ETF landscape.

Bitcoin Price Chart

Leadership Shift Influences Strategic Decisions

A recent changing of the guard at Vanguard has significantly impacted the company's strategic approach. Salim Ramji, who became CEO this year, previously managed BlackRock’s ETF business and has articulated blockchain’s potential. Despite this, Vanguard maintains that it has “no plans to launch its own crypto products.”

Andrew Kadjeski, who oversees brokerage and investments at Vanguard, acknowledged that cryptocurrency ETFs have successfully weathered market volatility while preserving liquidity. He noted that as administrative processes improve, investor preferences are evolving. Former CEO Tim Buckley had been more skeptical about cryptocurrencies, asserting that a Bitcoin ETF is not suitable for a typical retirement account.

With over 50 million clients, Vanguard now enables access to spot Bitcoin ETFs that previously could not be obtained through existing accounts, potentially making digital assets more mainstream.

Ongoing Skepticism Amid Market Dynamics

Vanguard has historically categorized cryptocurrencies as speculative investments, a label that doesn’t appear to be changing. The firm describes digital assets as extremely or very risky, with 66% of U.S. investors sharing this view, an increase from 58% in 2021, according to recent data from the FINRA Foundation.

Ameriks did acknowledge that Bitcoin could potentially carry non-speculative value in specific circumstances like high inflation or political instability, stating, “If you can see reliable movement in the price in those circumstances... But you just don’t have that yet—you’ve still got too short of a history.”

Additionally, a Vanguard spokesperson highlighted the firm’s optimism regarding blockchain technology's usefulness and its potential to enhance market structures. Despite the hesitance with cryptocurrency investments, Vanguard remains an indirect player in Bitcoin as the second-largest institutional shareholder in Strategy and manages around $11 trillion, treating crypto funds similarly to other non-core assets, such as gold.